Novak Factory provides a 2-year warranty with one of its products which was first sold in 2020. Novak sold $930,400 of products subject to the warranty. Novak expects $124,050 of warranty costs over the next 2 years. In that year, Novak spent $70,460 servicing warranty claims. Prepare Novak’s journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs.

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